A personal blog sharing ideas and observations on start-ups, the vc industry, technology, and life.

Tuesday, January 12, 2010

The Protocol Society

When Alabama and Nick Sabean won the BCS National Championship, ESPN called the win the revenge of the grinder. The recap story noted that Nick Sabean focuses on process and the "Alabama system."

That is not to say that winning is not important, but rather that Sabean knows that successfully defining and repeating processes is the key to predictable outcomes versus random acts of athleticism. Moreover, the better the system is codified, the more sustainable the athletic advantage

The logic is that by building discipline around core processes and protocols - how to block, how to run, how to tackle - victories will derive from that discipline.

David Brooks, my favorite NY Times columnist, made a similar point in his brilliant editorial - The Protocol Society.

He writes,

"In the 19th and 20th centuries we made stuff: corn and steel and trucks. Now, we make protocols: sets of instructions. A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass.

Kling and Schulz start off entertainingly by describing a food court. There are protocols everywhere, not only for how to make the food, but how to greet the customers, how to share common equipment like trays and tables, how to settle disputes between the stalls and enforce contracts with the management.

The success of an economy depends on its ability to invent and embrace new protocols. Kling and Schulz use North’s phrase “adaptive efficiency,” but they are really talking about how quickly a society can be infected by new ideas."

In my time as a CEO of a start-up, I have come to appreciate the wisdom of a commitment to process and the incredible momentum that comes from clearly defined models of operation that are well understood, repeatable, and embraced by the team.

Competitive advantage can be found in operational excellence, customer intimacy, technology innovation....however, one way to measure and predict a company's future ability to compete and succeed is to understand how their "protocol capital" as much as their technology.

Good protocols - systems - make for consistent winners. While some may feel process inhibits innovation, the rise of scrum and agile development speaks to the ability to innovate via light-weight processes that turn commitment to protocol into championships.